Wacky economics

While the world is marinating itself in economic gloom and doom, it’s time for the real scoop on the CNMI economy. Yes, there are real opportunities in the CNMI. But to see what is, you’ve got to also see what ain’t.

And, let’s be honest, this ain’t a “developing” economy, or even a sober one. But it is delightfully wacky. One thing I noticed 13 years ago when I set up shop was that the loudest people running around calling themselves “economists” on Saipan don’t even have college degrees on the topic, or in anything related to it. Nor did they know anything about it. They were just career bureaucrats sustained by the CNMI patronage system. It’s been a comical show.

But a costly one. The bungling huffery and puffery cost the CNMI most of its economy. Oops. Talk about a pie-in-the-face.

Indeed, you can ignore economic reality, but you can’t ignore the consequences of ignoring reality.

So the CNMI crashed itself. The feds aren’t to blame; the fall was in place long before labor and wage issues grew teeth. The feds are generously keeping the CNMI on life-support. Don’t bite the hand that feeds. It’s bad form.

And it’s not a dire situation. In fact, there are opportunities in such situations. You just have to know where to look.

Uncle Sam sends out so many millions of dollars to these islands that the financial echoes reverberate. For example, retailing (especially convenience stores), restaurants, bars, legal services, medical clinics, dental clinics, and auto repair shops will always be viable sectors as long as the checks keep rolling in from the mainland.

I used to be an economist for a company that derived about 80 percent of its sales from poor urban markets in the U.S., so I got to see, first-hand, that there is money to be made in what are, at first glance, unexciting opportunities. In this regard, though not urban, the CNMI’s economic structure, especially as the alien labor leaves, is pretty much what I got used to in that old job.

And do you know what? As I saw in that job, those market situations can be incredibly stable once the local area reaches equilibrium. We were locked in a two-way war with our competitor (who was bigger than us), but the aggregate market was shockingly stable and (all things considered) pretty easy to predict. After all these years, parts of the company are still in business (mergers gobbled up the other parts), just where they’ve always been, chugging along, while more glamorous businesses in richer, more dynamic regions went belly up a long time ago.

Furthermore, since we operated in areas with virtually zero job opportunities, we were able to recruit really bright, hardworking talent from the communities that we served. We promoted our managers from within and we paid them very well. It really was a success story on a lot of levels.

Anyway, back to Saipan’s gig. We’ll have to see what’s going to happen to the alien labor pool, but, whatever happens to it, the CNMI is drifting down into equilibrium; it’s just the slope of the line at issue. The direction of it (down) has been a given for 10 years, after the CNMI essentially punted the Japanese tourism market and went into economic Wacky Land.

And, let’s face it, if the tourism market had zoomed to its potential, we’d have ugly contention over “over-building” in the CNMI. If things had to turn sour, it was better that they turn sour before there are a bunch of vacant, derelict hotels to blight the shore. So I think we dodged the bullet on this.

I’ve worked in a mighty wide swath of the world, and I can assure you that Saipan is a lot better than most of it. So, don’t pine away after alternate realities that don’t really exist. This isn’t like Hong Kong, or Guam, but it doesn’t have to be. Would everyone really be happier if it was? I doubt it.

Yes, all over the world, economic panic is in fashion these days. But as long as the U.S. can afford to support the Commonwealth (note that caveat, since if Uncle Sam goes broke, all bets are off), I don’t see any need for alarm. Bottom line: If you want to survive in the CNMI, you’ll just have to find where the real opportunities are, instead of pondering the make-believe ones that live in the rainbows.